Cashbuild’s performance in 1H25 was commendable, with top-line growth driven by increased volumes across all product categories, and a much-improved performance from P&L Hardware, albeit off a low base. Overall, CSB appears to be making market share gains, and has outperformed retail Hardware market sales over the last 18 months.
The Cashbuild SA segment’s margin was affected by rising input and operating costs. It may be too early to comment on the feasibility of the new Cabifit chain and CashbuildXtra rebranding. However, CSB has been pushing to diversify its revenue channels away from traditional large-format stores, where trading densities have remained flat at c. R33 000 over the last four years, along with slow floorspace growth and rising costs associated with operating larger stores. The new store chains and small-model store (SMS) rollout should help improve trading densities and reduce operating costs, in our view.
P&L Hardware delivered a small operating loss of -R7m, but management is aiming to achieve breakeven by the end of FY25. Lossmaking and underperforming stores have been closed, and this brand only operates from 39 remaining stores. This has improved trading densities in P&L to c. R38 000, level with the densities achieved when CSB initially acquired the business. We estimate that there are only around five more stores that could be converted into other brands.
The Cashbuild stores outside of South Africa performed poorly, due to weaker sales and margins from Eswatini and Malawi. Management is employing the same cost-saving and growth initiatives in this region that are being employed in South Africa. Although these markets may be saturated, CSB’s view is that there are still some opportunities to open new stores.